Oregon Closes the Door on Common Law Indemnity Claims in Comparative Fault Cases

Oregon Closes the Door on Common Law Indemnity Claims in Comparative Fault Cases

In Eclectic Investments, I LLC v. Patterson, 357 Or 25 (March 19, 2015), the Court held that the judicially created doctrine of common law indemnity is not necessary in cases where Oregon’s comparative negligence statutes apply. As the Court explained:

The doctrine of common-law indemnity was developed before comparative responsibility and is inconsistent with its framework. In cases in which the Oregon comparative negligence statutes apply and in which jurors allocate fault – and thereby responsibility – for payment of damages between tortfeasors, and each tortfeasor’s liability is several only, a judicially created means of allocating fault and responsibility is not necessary or justified.
Eclectic, 357 Or at 38.

Oregon’s comparative negligence statutes apply to any claims asserting negligence, gross negligence, or strict liability. See Oregon Revised Statutes §§ 31.600, 31.605. Under the comparative fault system in Oregon, defendants are only severally, and not jointly, liable to a plaintiff. Thus, co-defendants are not responsible for any fault of their co-defendants.

In Eclectic, a construction defect case, the plaintiff sued Jackson County and the contractor, McAllister, alleging that their negligence caused damage to plaintiff’s property. The jury found the plaintiff to be more than 50% at fault, and consequently, neither Jackson County nor McAllister were held liable to the plaintiff. Nevertheless, Jackson County sought its fees and costs from McAllister on the theory of common law indemnity, arguing that its negligence was passive and secondary, while McAllister’s was active and primary.

The Court held that Jackson County was not entitled to recover its fees and costs under a theory of common law indemnity. The Court stated that because of the comparative negligence statutes’ application: “the county was neither potentially nor actually liable to plaintiff for the conduct of [McAllister]. Eclectic, 357 Or at 39. The Court, in a footnote, recognized that some other tort theory, separate from a common law indemnity claim, may allow a defendant to recover its defense fees and costs from another defendant, stating:

We do not decide whether a prevailing defendant may be permitted to recover its costs of defense from another tortfeasor on a theory other than common-law indemnity . . . . Here, the county’s cross-claim was not a tort claim against the contractor alleging that the contractor had committed a tort that required the county to protect its interests by defending a claim brought by plaintiff or that plaintiff’s claim against the county existed only because of the tort of the contractor. Rather, plaintiff alleged that the county was liable for its own negligence.

Eclectic, 357 Or at 39, FN 9. The Court also made it clear that its holding in Eclectic does not apply to cases in which contractual indemnity is alleged. Id. at FN 8. Stay tuned to this blog as we will continue to monitor developments in this area of Oregon law.

By: Elizabeth Wright